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By now, the fact that the business landscape has been irrevocably changed over the past several years is old news.
We’re over the initial shock of the rapid technological evolution brought on by the pandemic. Now is the time to start looking forward and thinking about what that evolution could mean for the future.
And where sales enablement is concerned, that future is defined by product led growth.
What Is Product Led Growth, Anyway?
Product led growth is an alternative approach to sales enablement and lead generation that puts your business’s product at the center of all go-to-market efforts. The product simultaneously becomes your core selling point as well as your means to acquire and retain customers. As one might expect, this typically works best for software-as-a-service businesses, as they can leverage interactive product demos as part of an experiential marketing strategy.
The concept of product led growth was first popularized by venture capital firm OpenView Partners.
Product Led Growth vs Sales Led Growth vs Marketing Led Growth
Before we delve into the specifics of a product-led strategy, there are two other common growth strategies that are worth mentioning.
Sales led growth puts the onus for success entirely on your sales team. Your business’s account managers and sales representatives manage the entire sales pipeline and customer journey, typically in collaboration with your marketing team. The core focus in sales-led growth is to generate and capture qualified leads.
Marketing led growth has a great deal in common with sales led growth. The main difference is that it’s your marketing team in the driver’s seat rather than your sales team. Targeted advertising and marketing bring prospects into your sales funnel at which point they’re transformed into qualified leads.
Product led growth differentiates itself from the above in a few ways:
- Prioritization of user engagement where revenue is concerned
- Lower customer acquisition costs (CAC)
- More self-service touch points within the sales funnel
- Product qualified leads as a core metric — individuals or businesses that have either experienced a product’s value directly or established its potential to provide value.
It’s important to note that none of these growth strategies are mutually exclusive. On the contrary, your business may actually find its growth efforts bear more fruit if you combine a product led approach with one or both of the alternatives. You must also understand that none of these strategies is superior to the others.
The best choice is largely dependent upon your business model and industry.
The Benefits of a Product Led Strategy
We already touched on one of the core benefits of a product led approach to business growth. Compared to other sales enablement strategies, a product led growth strategy has a significantly lower CAC. There are a few core reasons for this:
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- Reduced time to value. Focusing on your product wraps customer onboarding directly into the sales process. This considerably speeds up your sales cycle, shortening the amount of time it takes for prospects to progress through your funnel and convert.
- Better margins. With a sales led strategy or a marketing led strategy, the size of your team often plays a pivotal role in growing your business. This is not the case with product led sales enablement. You can afford to maintain a smaller team as you scale because your customers require less direct guidance.
- Improved user experience. Today’s customers demand better, more personalized experiences from the businesses with which they interact in B2B as much as in B2C. Devising a compelling product led strategy is an excellent starting point for making this happen.
- Retention. Leads that reach the bottom of a product-led sales funnel are far likelier to become recurring customers, as by this point they’ve already established that the product is a good fit for their business and the value it can offer them.
- Collaboration. Every department, from sales and marketing to customer support, combines their efforts in the pursuit of the same goal — more-so than with any other approach to sales enablement.
Product-led businesses also benefit from a wider top of the funnel along with the capacity to scale far more quickly than competitors with a different approach to sales enablement.
The Elements of an Effective Product Led Growth Strategy
The product led growth model is deceptively simple, consisting of three core components:
- Understanding the value your product offers to its customers.
- Communicating that value to prospects in a relevant fashion.
- Deliver on that value.
When devising a product led strategy, your business should pay close attention to the following metrics:
- Total acquisitions
- Activation rate
- Customer lifetime value
- Time to value
- Expansion revenue
- Net revenue churn
- Average revenue per user
- Product qualified leads
If your strategy involves a freemium licensing model, you’ll also want to track the rate at which free users convert to paying users.
The Role of Product Demos in Product Led Growth
Provided you don’t operate a free version of your software, product demos are effectively the bread-and-butter of product led growth. They are the first impression most leads will have of your business. They are also the means by which you’ll both onboard customers and move them through your sales funnel.
It should go without saying that you need to provide a high-quality demo experience. It’s not enough to simply spin up a physical lab or have your sales team deploy your software into a prospect’s ecosystem.
Instead, you need a means by which you can accurately and efficiently simulate any operating environment — a tool your business can use to effortlessly spin up a custom, personalized product demo for any use case. A tool like CloudShare.
Our award-winning business acceleration platform allows your sales team to easily create engaging product demos, self-service trials, and proof of concept demonstrations. More importantly, it empowers your team with deep analytics through which they can monitor and evaluate precisely how customers engage and interact with your product, identifying potential bottlenecks and opportunities in the process.
Are you looking for a feature-rich platform with all the functionality you need to build out a compelling, successful product-led growth strategy? Book a demo today and experience the CloudShare difference.
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